February 01, 2019

Brian Leiter and Paul Caron both recently noted a study by Adam Chilton, Jonathan Masur, and Kyle Rozema which argues that law schools can increase average faculty productivity by making it harder for tenure track faculty to get tenure. While this seems plausible, denying tenure more often is no free lunch.

A highly regarded study by Ron Ehrenberg (published in the Review of Economics and Statistics) found that professors place a high monetary value on tenure, and a university that unilaterally eliminated tenure would either have to pay more in salary and bonus or suffer a loss in faculty quality. After controlling for faculty quality, university rank, and cost of living, university economics departments that are less likely to offer faculty tenure must pay untenured faculty more, in part to compensate for increased risk. Reduced tenure rates is associated with higher productivity, but it is costly.

It's easy to understand why. A promising candidate with offers from otherwise comparable universities A and B would be unlikely to take an offer from A knowing that A denies tenure 70 percent of the time while B only denies tenure 10 percent of the time.

Faculty who are untenured and at an institution with high tenure denial rates would also have strong incentives to spend their most productive years avoiding publishing anything that might upset private sector employers who could give them a soft landing in the event that they are denied tenure. Quantitative measures of faculty "productivity" based on number of citations and publications don't capture the harmful qualitative shift this would produce in faculty research, particularly in an area like law.

There are numerous other advantages to tenure (and disadvantages to weakening it), which I've discussed here and here, including protecting intelletual freedom, encouraging faculty to share rather than hoard knowledge, promoting investment in specialized skills, aligning faculty and institutional incentives, increasing the rigor of teaching and improving outcomes for students (compared to use of adjuncts).

October 07, 2018

"White House hawks earlier this year encouraged President Donald Trump to stop providing student visas to Chinese nationals, but the proposal was shelved over concerns about its economic and diplomatic impact. . . .

Stephen Miller, a White House aide who has been pivotal in developing the administration’s hardline immigration policies, pushed the president and other officials to make it impossible for Chinese citizens to study in the US, according to four people familiar with internal discussions. . . .

While the debate was largely focused on spying, Mr. Miller argued his plan would also hurt elite universities whose staff and students have been highly critical of Mr Trump, according to the three people with knowledge of the debate.

The issue came to a head in an Oval Office meeting in the spring during which Mr Miller squared off with administration opponents, including Terry Branstad, the former Iowa governor who is US ambassador to China.

According to the four people familiar with the discussions, ahead of the Oval Office meeting Mr Branstad argued that Mr Miller’s plan would take a much bigger toll on smaller colleges, including in Iowa, than on wealthy Ivy League universities. US embassy officials in Beijing also made a broader economic argument that most American states enjoy service-sector trade surpluses with China, in part because of spending by Chinese students.

Mr Branstad succeeded in convincing the president that Mr Miller’s proposal was too draconian, according to one person familiar with the White House showdown. At one point, Mr Trump looked at his ambassador and quipped: “Not everyone can go to Harvard or Princeton, right Terry?”

One person familiar with the debate said Mr Miller’s opponents were worried the president might return to the issue, particularly as he takes an increasingly tough line on China over everything from trade to cyber security.

September 29, 2018

Public pension funds in New York and California are increasingly considering Climate Change related risks as a criteria for guiding their investment decisions. The move to consider climate change is driven in part by a perception of insufficient federal action on these issues and the prospect of environmental harm eroding long term performance for a diversified portfolio of investments.

September 27, 2018

I testified earlier today at the House Judiciary Committee on the "State of Intellectual Freedom in America." A copy of my written testimony can be seen here. My shorter oral remarks are available here.

An excerpt appears below:

"Disagreement between knowledgeable scientific experts and median political views often do not suggest political bias on the part of scientists, but rather an effort by think tanks, media organizations, interest groups and politicians to inappropriately politicize scientific issues.

For example, the causes and consequences of Climate Change are scientific issues. The likely economic harm from such changes, and the costs of preventing or mitigating them, are also scientific issues. So are the adverse health consequences from air and water pollution or the health effects of smoking. So is the question of whether tax cuts can generate enough economic growth to reduce the Debt-to-GDP ratio.

While scientific questions can have political and policy implications, scientific inquiry should not be politicized. The best evidence should be analyzed with the best methods, and the implications and degree of uncertainty honestly conveyed to policymakers and the public.

But according to scientific experts, many scientific issues have been inappropriately politicized when scientific evidence threatened private sector profits or government budgets. These issues include the causes and effects of climate change, the health risks of pollution, and the dangers of tobacco use.

According to a Pew survey, nearly 80 percent of scientists believe that previous administrations suppressed government scientists’ findings for political reasons. Many scientists worry that suppression of scientific findings for political reasons is becoming more common.

Note that the Pew sample consists overwhelmingly of natural or “hard” scientists in fields such as medical sciences, chemistry, physics and geosciences. Pew’s sample included those who work in private industry as well as those who work in government and universities.

Recently, there have been systematic efforts by some members of Congress to weaken the role of science in informing agency rule-making and increase the role of political actors. Some politicians have also sought to prevent government agencies from collecting basic data about demographics, the environment, health and safety, and the economy, even if de-identified to protect individual privacy.

Today, threats to academic freedom can come from powerful donors, political leaders, and outside pressure groups who sometimes seek to subtly (or not so subtly) influence ostensibly neutral and unbiased academic research to further their own business interests or other political preferences.

The best way to protect universities from undue influence may be to secure and expand revenue sources that are indifferent to or cannot sway the conclusions of academic research. This is analogous to the approach we take to try to protect the independence of members of the federal judiciary or the Federal Reserve."

September 25, 2018

A recent working paper by Caroline Hoxby (Stanford) suggests that the economic returns to online education (measured in terms of wage growth) may be too low to recoup the costs of these programs, especially as administered at for-profit institutions. Hoxby used a fixed effects approach, measuring earnings before and after online education compared to likely earnings without online education. She found that online education does not boost earnings by very much, and it does not do much to move students into more lucrative industries or occupations. Hoxby found evidence that most students pursuing exclusively online degrees lived within commuting distance of brick-and-mortar institutions that likely offered higher quality education with better returns.

Hoxby's observational results are consistent with experimental studies that have found worse outcomes for students randomly assigned to online education compared to traditional education.

In previous research, Hoxby warned that the spread of online education could undermine highly selective institutions' ability to finance original research and teaching innovations. Hoxby wrote: "selective] institutions weaken rather than strengthen their market power in research and original content creation when they increase their exposure on the internet."

Hoxby's working paper has been criticized by groups advocating partnerships between for-profit technology companies and educational institutions to spread online education to non-profit and public institutions. For-profits have been online education's earliest and most enthusiastic adopters, while private non-profit and public institutions have generally taken a more conservative approach. The strongest of the critiques of Hoxby's paper is that it looked at returns over the course of 10 years rather than a lifetime. The present value of lifetime earnings premiums is a more appropriate measure of the returns to education.

September 23, 2018

I've previously noted some of the outrageously implausible assumptions used by organizations with links to private student lenders (such as the New American Foundation, AEI, Brookings, Manhattan Institute, and Barclays) in an apparent effort to portray federal student loans as a threat to the public fisc. Such studies have been used to justify increases in federal student loan interest rates, credit rationing (borrowing caps), and a less accommodative policy with respect to income based loan forgiveness.

A new government report suggests that these groups may have also over-estimated the costs of Public Service Loan Forgiveness (PSLF). PSLF is distinct from income-base repayment programs (IBR). Whereas IBR is intended as insurance for student loan borrowers against relatively low earnings persisting over the course of a 20 year period, PSLF is intended as a wage subsidy to encourage highly educated skilled workers to accept public sector and non-profit jobs and continue to work in them for at least 10 years.

Early estimates had wildly exaggerated the cost of PSLF, assuming that 25 percent of student loans would be discharged through these programs within 10 years, since at any one time around 25 percent of the workforce works in the public sector.

There are numerous problems with this estimate: graduates transition in and out of the workforce; graduates move between the private and public sectors; not all public sector work qualifies for PSLF. It will therefore take far more than 10 years after graduation for many borrowers to accumulate a sufficient period of time working in qualifying public sector jobs before they can earn forgiveness. During this time period, borrowers continue to make student loan payments, decreasing the budgetary costs of eventual debt forgiveness. The eligibility and documentation requirements for PSLF are also stringent, further disqualifying many applicants.

According to the government report noted above, in the first year in which graduates could potentially qualify, only 28,000 borrowers applied and only 96 (less than 0.5%) qualified for forgiveness. 28 percent of applications were disqualified for missing information, while over 70 percent were disqualified because they had not yet met the program eligibility requirements.

The total balance forgiven in the first half of 2018 was $5.52 million dollars. The CBO, relying in part on assumptions advocated by think thanks, had estimated that the program would cost $425 million in 2018, and nearly $24 billion within 10 years.

While qualifying applications are likely to grow in the coming years, the contrast between the high estimated cost and the low actual cost thus far is striking.

August 08, 2018

Online education is controversial in higher education. It is even more controversial in legal education, which relies more on classroom interaction and less on lectures than most forms of higher education.

Widespread perceptions that online education is lower quality than live instruction in general—and may be particularly disadvantageous in legal education—are backed by numerous peer-reviewed empirical studies.[1]

Proponents of online education argue that it is more convenient because students and faculty do not have to commute, or because students can learn at their own pace. They argue that it is potentially more cost effective, either because physical facilities need not be used, or because it is scalable, or because an artisanal model of teaching through knowledgeable faculty can be replaced with a less expensive, industrial model of low-skill specialized workers who each handle particular aspects of course development and teaching. Some argue that technology can be used to closely monitor and track students, and that the information gathered can be used to improve the quality of education.

Critics of online education argue that it is lower quality, that most students learn and absorb less, and that the social dynamic of the classroom and learning from one’s peers and interacting with alumni is a critical part of education. (In addition to multiple peer-reviewed studies, they point to recent examples of “online education” such as self-paced workplace training modules as examples of the low quality that can be expected.)

Critics point to the failure of MOOCS—which have extremely low completion rates (see also here)—as evidence of the limits of scalability. They point to the pricing and cost experience of most universities, which have seen high costs of developing and maintaining online courses and additional software licensing fees which have prevented them from charging much less for online classes than for those taught in person. And they point to a rash of cheating and distracted learning, which anecdotally seem to be more prevalent online than in person.

Perhaps the most empirically rigorous (and recent) study of online education to date—which relied on an experimental design with random assignment of students to different versions of the same introductory economics course—found evidence that “live-only instruction dominates internet instruction . . . particularly . . . for Hispanic students, male students, and lower-achieving students.” An earlier study which also used a quasi-experimental approach, found similar results, especially for complex conceptual learning:

“We find that the students in the virtual classes, while having better characteristics, performed significantly worse on the examinations than the live students. This difference was most pronounced for exam questions that tapped the students' ability to apply basic concepts in more sophisticated ways, and least pronounced for basic learning tasks such as knowing definitions or recognizing important concepts . . .

Choosing a completely online course carries a penalty that would need to be offset by significant advantages in convenience or other factors important to the student. . . . Doing as well in an online course as in the live alternative seems to require extra work or discipline beyond that demonstrated by our students, especially when it comes to learning the more difficult concepts.”

August 02, 2018

NALP entry level starting salaries and employment don't predict much of anything about what will happen three to four years from now when those currently contemplating going to law school will, if they choose to attend, graduate into a quite possibly very different economy. Nor is NALP data directionally very different from overall economic data like the employment population ratio which is released sooner.1 And while those graduating into a stronger economy do earn more (at least for the first few years), these cohort effects fade over time, those who graduate in a recession still benefit from their educations, and attempting to time law school is a money-losing proposition because of the opportunity costs of delay.

Nevertheless, every year NALP data on last year's graduating class is released with great fanfare, including a press release. In news that will surprise no one who has tracked the rise in the overall employment population ratio, it turns out that the class of 2017 had better employment outcomes than other classes since the recession. Or as NALP sexes it up for journalists, "Class of 2017 Notched Best Employment Outcomes Since Recession." (88.6% employed 9 months after graduation for the class for 2017, compared with 87.5% for the Class of 2016).

But, NALP unhelpfully informs us, there's a catch--the total number of law jobs for law graduates was lower even though the employment rate was higher.

This should not surprise anyone who is aware that the number of law school matriculants last peaked in 2010, and graduating class sizes have therefore been falling since 2013. From 1994 through 2015, the correlation between annual % change in graduating class size and annual % change in number of law graduates with jobs has been 0.78 (i.e., class size explains 61 percent of the variation in number of law jobs for recent graduates. (data here) The correlation is even higher since 1999 when reporting started covering a higher percent of the class--0.91 correlation, meaning that class size explains 82% of the variation in the number of law graduates with jobs.

There aren't fewer jobs available for lawyers. To the contrary, there are more lawyers working now than there were pre-recession according to both Bureau of Labor Statistics and Census Data (BLS OES, ACS, and CPS). There are fewer recent law graduates working as lawyers because there are fewer recent law graduates.

The employment market for educated workers is large and the number of law graduates is small relative to this market. Law schools are too small to move the market much on the supply side by admitting more or fewer students. Just as the typical investor could sell all of his or her shares of Apple without moving the market for shares of Apple (much less the S&P 500), the typical law school can admit as many or as few students as it wants without changing the overall percent of law graduates who will find jobs. (However, there’s some evidence that at the national level, the share of recent law graduates working as lawyers varies inversely with class size).

The usefulness of NALP data is questionable (at least for many of the uses to which it is often put), but NALP could help by limiting its reporting to employment rates and starting salaries. Discussing changes in the absolute number of law graduates with jobs is simply a confusing ways of telling people that fewer people entered law school 4 years ago than 5 or 6 years ago.

NALP should also contextualize its employment ratios by comparing them to the overall U.S. employment population ratio during the same time period (i.e, March of 2018), which was 60 percent overall, and and 79 percent for those age 25-54 according to BLS and the OECD, compared to 89 percent for recent law graduates, according to NALP.

1 (Similarities are greatest when one restricts it to those who are both young and well-educated using CPS data.

UPDATE: 8/3/2018 The correlations and r-squared were originally reported based on levels rather than % change from previous year. The numbers have been updated to reflect a model based on differencing (% change from prior year), which brings the explanatory power from 1999 forward down from 96 percent to 82 percent.

July 21, 2018

I recently pointed out some factual problems with claims by Northwestern lecturer Mark A. Cohen. Cohen, writing in Forbes, claimed that faculty terminations at Vermont Law School were proof that student debt was unsustainable, not only at Vermont, but at all law schools except for a handful of elite institutions.

Here’s the problem: When student debt levels are unsustainable, student default rates are high. But at Vermont--and at most law schools--default rates are low.[1]

When Professor David Herzig pointed out some of the relevant literature to Mr. Cohen, Cohen responded with the following angry outburst on twitter:

“That "evidence" has been panned by every credible source I know. The methodology and premises upon which the conclusions were drawn are laughable and fly in the face of real studies. I was a bet-the-company trial lawyer for many years--the "study" you cite is 3rd rate fiction.”

Low student loan defaults for law graduates are consistent with the peer reviewed literature, such as The Economic Value of a Law Degree (final version here), Timing Law School (final version here), and related work by me and Frank McIntyre about the value of legal education. Law degrees generally provide benefits that are substantially greater than their costs, even toward the low end of the distribution, across race (final version here), sex and college major, both before and after the financial crisis, and including those who graduate during a recession. More than the top 75 percent of law graduates are getting good value relative to a terminal bachelor’s degree.[2]

Strong student loan performance is also consistent with the After the JD study (compare waves I, II, and especially III), which showed rapid income growth for graduates of even low ranked ABA-approved law schools, and eventually, six-figure median full-time incomes.

Law students’ low default rates have featured in the business strategies of many student lenders, who are eager to refinance law student debt for interest rates substantially below those offered by the federal government.

Professor Herzig asked Mr. Cohen to be more specific about his sources and objections.

Mr. Cohen has yet to specify what he believes is wrong with the methodology in the studies—which were authored with a PhD labor economist, peer reviewed and carefully vetted, use high quality government data, use mainstream methods and assumptions that are well established in labor economics, and include sensitivity analyses and robustness checks. The results have been replicated by other researchers.

Mr. Cohen also has yet to specify which “real studies” he thinks use better data and more widely accepted methods, and why. He has yet to explain how his litigation experience qualifies him as a labor economist, statistician, and literary critic. Or why, as a seasoned litigator, he thinks so many of the lawsuits against law schools have been dismissed.

July 18, 2018

Ellen Shell, a journalism professor at Boston University, recently wrote an article for the New York Times arguing that while higher education confers vitally important advantages in the labor market,[1] education alone is not enough to overcome the disadvantages of childhood poverty and to promote greater equality.[2] The purpose of Shell’s article was apparently to advocate for more comprehensive efforts to overcome poverty, above and beyond greater investment in higher education.[3]

In the hands of editors at the New York Times, the title of Professor Shell’s Op Ed became "College May Not Be Worth It Anymore."

Several readers who contacted me about this article assumed that Professor Shell was an elitist who believed that the poor did not deserve to be as well educated as her own children.[4] Apparently so did the author of the study she cited. He says that to the extent that Professor Shell may have intended to downplay the benefits of education to poor children, she misunderstood his work.[5]

I contacted Professor Shell to ask about the discrepancy between the contents of her article and its title, and whether New York Times editors had changed her title.

She wrote back that she was surprised by the title, that it did not match the contents of her article, that it must have come from the editor, and that it did not endear her to the administration at her university.

I knew to ask Professor Shell before jumping to conclusions because I have also been surprised to find that New York Times editors attached inapposite, critical titles to my work.[6] And I have repeatedly heard similar complaints from other professors who have written Op Eds for the New York Times and from sources who have been misquoted by the New York Times and had their professional reputations damaged as a result.

Most readers of newspapers assume that the writer listed in the byline of a newspaper article or Op Ed is responsible not only for the text of an article, essay or Op Ed, but also for the lead or title that appears at the top.

Editors choose the titles of Op Eds or articles. Because many readers only read the lead or title, and not the full article, this gives senior management at media companies an enormous amount of power. This power comes without public scrutiny, since usually only the name of the “author” (and not the editor) appears in the byline of the article.